Friday Rant: What's in a Brand? For Tiffany's new "Rubedo" Cuff, a Preposterous Mark-Up

Eyes around the world light up at the sight of that lovely signature minty turquoise box with the crisp white ribbon: the brand recognition of Tiffany is ubiquitous. Two of my favorite fashion bloggers, in fact, just featured this adorable video "What Makes Love Come True" as a tribute to how a piece of (Tiffany, of course) jewelry can seal the deal. But you have to be daft to think that you're not paying a huge mark-up for the Tiffany "brand" and experience. A good friend of mine who recently got engaged admitted that her 1-carat diamond ring (of better clarity) actually came from the concrete floor and fluorescent lighting House of Costco -- for roughly a third of the price for something similar at Tiffany.

But a recent Forbes story makes me think that Tiffany is taking the worth of their brand a bit too far into bullsh*t territory. Ladies and gentlemen, meet Rubedo, "a new Tiffany metal that captures the rose luminescence of a sunrise." It's really quite pretty, but for a cuff retailing at $7,500, I thought I'd do some research into what this new "metal" is made of.

Source: Tiffany.com

Therefore, I put on my best in-the-market-for-a-$7,500-bracelet voice and called the downtown Chicago store to talk shop. "It's utterly gorgeous," I cooed to the more than willing to help salesperson. "How much does it weigh?" The ultra-wide cuff measures in at 2.1197 inches tall and weighs in at 109.02 grams of Rubedo (3.846 ounces, or .2404 pounds). "So what exactly is Rubedo made of?" I next asked. "Is it like rose gold?" to which the salesperson replied, "It's a compilation of copper, silver, and gold. Rose gold is 18-carat gold with a [probably zinc] plate on top." When I asked what percentages of what comprised the metal, things got a bit chilly. "I can't give the exact metal composition percentages," I was told. The salesperson had also been clearly trained to refer to Rubedo as a "metal" rather than the alloy it is. The gold included is 18 carat.

I then took my quandary to MetalMiner's Lisa Reisman, who helped me do some quick calculations from the MetalMiner IndX™ based on percentages given in the Forbes article: "small parts silver and zinc, 55% copper, and only 31% gold." (Funny how zinc was left out of the Tiffany representative's vocabulary). Here's the tentative percentage breakdown we came up with (per bracelet):

55% copper
31% gold
7% silver
7% zinc

Based on today's current prices, here's the raw material cost breakdown for one bracelet:

Gold: $1,492
Copper: $0.49
Silver: $8.63
Zinc: $0.09

Raw material cost is around $1,501.21

Conservatively speaking, in a typical manufacturing scenario, raw materials make about 25% of the total cost which would put us at $2,628 for the "cost to produce."

So: Tiffany is charging around $4,872 for that "turquoise box," so to speak.

Extrusion is very efficient and cheap, especially for a straight cylinder. I would shoot from the hip and say the processing is definitely under $20 (probably under $10). Let’s say we take, the $1500 raw mat’l cost + $20 processing/logistics + $100 for marketing (which might be outrageously high). That’s a $1,600 Fully Burdened Cost for the high class Wonder Women wrist bracer (you’ll need 2 for Halloween). Just one bracelet is almost $5,900 PROFIT (370+% margin)!

So, my conclusions are:

1. We see the weakness in Product Cost Management of applying simple proxy multipliers to calculate a cost.
2. Sheena is even MORE correct in that the bracelet is not worth it.
3. Kudos to Tiffany’s for Jedi Mind Tricking girls into believing a $1,600 bracelet is worth 3x as much.
4. Ladies, your boyfriend’s/fiancee’s/husband’s willingness to buy you one may mean he’s filthy rich, desperate, or not too smart… but it may not necessarily mean he loves you (just my guess, but I’m a product cost guy, not the love Dr.)

ehaleiwa – The 18k gold reference came directly from Tiffany. The composition numbers came from Forbes. Not sure what point you are trying to make except that we collect costume jewelry, which is exactly our point – the premium Tiffany charges for this isn’t worth it. So thank you! We’ll keep our department store trash. 🙂

You are INCORRECT: 31% gold is equal to 7.4 karat, NOT 18k (which you wrote). 18k gold is 75% gold content. The K indicates how many parts is pure gold, the sum is 24 parts. So jewelry marked 18k means 18 of 24 parts is pure gold, the other 6 parts are not gold. These non-gold parts are often silver,nickel,copper. In cases to make the gold more "white" the non-gold metals are titanium,palladium, platinum. And in cases to make the gold appear "rosy" the non-gold metals are zinc and copper. So–you are also INCORRECT writing the rose gold color comes from zinc plating. Your complete ignorance regarding the matter of gold jewelry–I’m guessing you have a hinged box on the dresser full of department store trash, you call "accessories."